Farmers who insure their property typically take out a whole policy, with separate sections for each category of belongings. That includes equipment, and Debra Corner, Missouri Farm Bureau Insurance agent at the Greene County office in Republic, Mo., said their policies recognize the fluid nature of agricultural machinery.
“The rule of thumb is the farmer must insure at least 80 percent of his machinery in order for it to be covered at 100 percent at all times,” Corner told Ozarks Farm & Neighbor. “When the farmer comes in, they always have the concern, ‘This is my total for now, but I’m going to be buying and selling, and getting rid of some equipment.’ We hope to get 100 percent insured, but as long as 80 percent of that machinery is insured, Farm Bureau covers the farmer for 100 percent. For example, if a farmer went and purchased a piece of machinery, and had a claim before they got it to the agent and got it called in, it would be covered under their blanket inventory.”
Corner usually writes policies that insure the farmer’s dwelling, the acreage, and a “blanket inventory” category that is specifically designed for machinery, livestock, grain and feed. The producer fills out a form listing current inventory, and she can attach it to the policy and charge a flat premium for the total.
Dan Childs, consultant with the Noble Foundation in Ardmore, Okla., told OFN that each piece of equipment would be itemized, just like vehicles, “If you had a tractor, a grain auger, a combine, things of that nature,” he explained. “You would try to come up with an asset value for the condition that they’re in, and that policy would list these items itemized out. You would list the VIN number of the tractor and as much individual identification as possible. If you had identification for them specifically, such as a model number or serial number, something unique to that asset, it would be helpful.”
The farmer has some ability to “self-insure,” exclude items from coverage, and can, for instance, select which buildings that are on the property, you may pick and choose what you want to self-insure, and what you do not.
“Many times the farmers have lots of small tools, power hand tools, and sometimes they’ll list close to 80 percent but say I’ll just cover the cost of the rest. What I hear a lot of times is, I just can’t afford it all,” Corner said.
“Try to get people to think about what they can self-insure themselves versus what they need to pay someone else to insure that they can’t afford to self-insure,” Childs added.
Of course, the policy carries a deductible. There is a deductible taken out of any claim on the dwelling and personal property, but Corner said there is a “gray area” for what is and is not tied in with the farming business. Personal property that is used on the farm needs to be listed on the farm inventory. There is another deductible on other structures like the barn, shops and machinery shed, and a separate deductible for the blanket farm inventory.
“All of those do not have to be exactly the same,” she said. “There is a per-occurrence deductible; it’s not a deductible per category. If a tornado comes through and damages the house, other buildings and machinery, hay and livestock, you’re only going to have one deductible for that occurrence.”
The policy identifies “named perils” on which claims can be made; normal wear and tear is not covered. Corner said MFB goes on the honor system when writing the policy, although if there’s a large inventory, “I usually go out on my own, go into the shop buildings and make sure what they’re telling me is there. If at any time I find out the farmer is not being up front with me, and not willing to follow Farm Bureau guidelines, that’s where we have to part.”
When there is a claim, an adjuster will come out to meet with the farmer, discuss the incident and inspect the premises.
And business is good.
“We get a lot of farmers, and I love it. I’m married to a farmer of 40 years, so I love dealing with the farmers and helping them,” she said.
